SIMPLE IRA Plans (Savings
Incentive Match Plan for Employees of Small Employers):
SIMPLE IRA Plans offer great advantages for businesses that meet two basic
criteria. First, your business must have 100 or fewer employees (who earned
$5,000 or more during the preceding calendar year). In addition, you cannot
currently have another retirement plan. If you are among the thousands of
business owners eligible for a SIMPLE IRA plan, read on to learn more.
A SIMPLE IRA plan provides you and your employees with a
simplified way to contribute toward retirement. It reduces taxes and, at the
same time, attracts and retains quality employees. And compared to other types
of retirement plans, SIMPLE IRA plans offer lower start-up and annual costs …
they are just simpler to operate.
Other Advantages of a SIMPLE IRA Plan:
-
SIMPLE IRA plans are easy to set up and run
– your financial institution handles most of the details.
-
Employees can contribute, on a tax-deferred
basis, through convenient payroll deductions.
-
You can choose either to match the employee
contributions of those who decide to participate or to contribute a fixed
percentage of all eligible employees’ pay.
-
You may be eligible for a tax credit of up
to $500 per year for each of the first 3 years for the cost of starting a
SIMPLE IRA plan. (IRS Form 8881, Credit for Small Employer Pension Plan
Startup Costs).
-
Administrative costs are low.
You are not required to file annual
financial reports.
